Got Bugs, Water, or Repairs? Illinois Wants to Add Tax to Fix It

May 3, 2017

The Home Builder’s Association of Illinois (HBAI) held a press conference Tuesday regarding a new tax proposal being discussed as a way to dig Illinois out of its self-dug budget hole. The proposed 6.25 percent tax on home repair services (but not materials) would "slow down homeowners' spending on repairing their homes," said Bill Ward, executive vice president and director of governmental affairs at the Home Builders Association of Illinois. "The state should not be discouraging upkeep of homes," he said.

Illinois hasn't had a budget for two years, so In yet another effort to come up with a working budget, Senate Bill 9 is making the rounds in which State Senator Toi W. Hutchinson added a new group of items to the Taxable Services list.

Hutchinson seems to think that putting a 6.25 percent tax on keeping up one's property is a terrific way to add to the state's revenues. Services that keep real estate property well maintained, in good repair (think property values) and safe on the Hutchinson taxable list include:

Structural services indoor and outdoor
  • painting
  •  coating
  •  inspection
  • cleaning
  •  repairs
  •  alterations
  •  general maintenance and servicing
Landscape services
  • watering
  •  mowing
  •  mulching
  • leaf removal
  • sod installation
  • tree and flower planting
  • weeding
  •  fertilizing
  •  irrigation installation and sprinkler system repair
  • sod installation
  • tree trimming and removal
Bug and vermin control
  • spraying
  • trapping
  •  removing
  •  killing
  •  fumigating
Hardscape
  • fences
  • walkways
  • patios
  • retaining walls
  • trellises
Grading services
  • filling
  • leveling
  • topsoil installation or removal
Snow removal  

 

HBAI estimates the proposed 6.25 percent sales tax on the repair and maintenance of homes in Illinois, included in Senate Bill 9, would cause:
-A $47 million decline in work for home repair and maintenance
-$43 million less income for Illinois workers
-521 fewer Illinois jobs
-Nearly $8 million less in local and state tax revenue

 

HBAI also said a home repair tax will force many homeowners to skip repairs that should be made now and only increase  those costs later.

“Illinois already ranks 50th – dead last in the nation – on the number of building permits issued compared to our population. All other states are seeing more activity in building homes than we are,” said Ward. “Some home builders have added home remodeling and repair services just to keep the doors open, and this bad tax idea threatens their existence and to hit Illinoisans who need to fix their cabinets, gutters or sinks with a big tax bill. This tax is not a good solution for Illinois’ budget woes.”

To add to the confusion for both property owners and service businesses, repairs and remodeling are often bound up in one another.

"It can be incredibly difficult to draw the line between the two," said Andy Wells, president and owner of Normandy Remodeling. "Some remodeling is driven by repairs being needed," he said. His example: When homeowners go to repair an old leaky shower, they may decide to install an entirely new shower, tub and surround while they're at it.

Wells said contractors might have a hard time determining which parts of a job were subject to tax and which weren't. Homeowners might not know what falls under repair and what under remodeling when setting their budget, which Ward suggested would lead some to curtail the size of the job they agree to.

Then there is the trickle-down effect. Repairs to property hit by fire or storm damage will cost more, possibly bringing insurance rates even higher, and for those already suffering through a natural disaster, this tax just adds unnecessary pain.

The bill is based on a similar law in Wisconsin that has been difficult for owners and businesses to work with.

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